Facing muted economic growth and recent deflation, the Bank of Thailand policy committee on Wednesday cut its policy rate by 0.25% to 1.00%, by a 4-2 vote.
Thailand's economic growth "is projected to remain below potential in 2026 and 2027 and uneven across sectors, reflecting structural impediments and intensified competition," the Thai central bank said in a prepared statement.
The past 10 monthly consumer price index releases in Thailand have logged mild deflation, with the latest report in January showing prices down 0.66% on year.
The Bank of Thailand has a 2% inflation target, within a plus or minus 1% band.
The soft Thailand economic outlook was only modestly brightened by an updated gross domestic product (GDP) estimate from the central bank that the nation's economy expanded by 1.9% in 2025, a positive revision of the previous estimate of 1.5% on year.
In its latest forecast made in December 2025, the Bank of Thailand estimated the nation's GDP would expand by 1.5% in 2026 and then 2.3% in 2027.
Bank of Thailand Governor Vitai Ratanakorn said fiscal and monetary policies must be better integrated to help Thailand reach its potential growth rate of 2.7%, speaking to the business group on Tuesday, reported the Bangkok Post.
The strong Thai baht, the nation's currency, also concerned central bankers.
"The (baht) appreciation has tightened financial conditions for exporters, particularly for products facing intense price competition and low profit margins. The (Monetary Policy) Committee expresses concern over signs of exchange rate misalignment from economic fundamentals," said the Bank of Thailand.
The baht traded at nearly 38 to the U.S. dollar in October 2022, but has since appreciated by 18% to near 31 to the greenback in Wednesday trading.
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